Choosing between building a new home and renovating the existing one deserves careful consideration and evaluation. Both scenarios have merits and difficulties that can not be ignored, and the answer to which to choose will be different for every homeowner.
Choosing to improve what you already have rather than build from the ground up requires closely considering your goal. Reasons for opting for a renovation include valuing the community you have created around you to living closer to all the great amenities. A home renovation contractor has the professional expertise to handle your remodel from start to finish.
According to the PODS article titled "Time to Buy a New House or Renovate? See What the Trends Are Telling Us," California (Los Angeles and San Francisco area) and New York (Long Island) made the top of the list of states with the most renovations, with Florida (South Florida and Tampa Bay) following in third place.
Home renovation statistics by Statista reveal that the estimated expenditure for home improvements in the US amounted to $457 billion in 2020. These include minor to major updates like air conditioning and heating systems to boost energy savings, waterproofing roofs, soundproof rooms, and expanding the home's square footage. In 2021, home improvement stores in the US generated nearly $300 billion in sales.
If your current home isn't working for you, it's best to lean toward a new custom home. This is an exciting time to collaborate with a professional home builder and craft a house tailored to your unique lifestyle. Depending on your goals, size, and the project's complexity, the process carries its unique merits and setbacks, but the long-term investment is worth it a few years down the line.
Custom construction means nothing is pre-planned or pre-designed. It requires significant planning, active involvement, and patience—and, of course; there's the financial aspect to keep top of mind. Ramsey's article titled "How Much Does It Cost to Build a House?" indicates that expenses depend on size and location. For instance, the average cost of building a 2,000-square-foot home in California is $405,000. A residential general contractor will save you time and money and ensure successful project completion.
So, when is the right time to build a new house? New home construction statistics indicate that construction cost increases have slowed to a 3.3% increase in September 2022—down from a 32% growth at the start of the pandemic. This year, costs are expected to increase at a normal pace between 2% – 4%.
So, which of the two do you consider a better investment? As you will see below, both have unique advantages and disadvantages, and there're things to consider while deciding between the two.
As previously mentioned, determining whether to build new or renovate can be a challenging position to be in. Here are key factors to consider while making your choice:
With any type of construction project, cost plays the most influential factor that requires careful consideration. Building a new custom home entails considerable expenses, but don't assume a renovation will be any cheaper. Major renovations, particularly an old house that's seen better days, require you to set aside a large sum of money. Unexpected costs, including unseen structural issues and optimizing the house to meet today's energy efficiency standards, are money out of your pocket.
On the other hand, building from the ground up provides a clean slate: more control over the design, an environmentally efficient home at the onset, and a new structure means minimal repair and maintenance costs. For this reason, it's crucial to research the financial implications involved to determine what is possible for you.
While your budget might be a major concern, time is another crucial factor. How long it takes depends on the magnitude of the project. Both scenarios can take a toll on your daily routine. For example, are you prepared to live in a construction zone for several months of renovation?
Consider everything that you want in a new home and note how many of your needs and desires can be achieved by renovating your existing house. The latter allows you to do so in a less expensive way. However, if your focus is aimed at drastically expanding the amount of square footage or an entirely new floor plan, then building from scratch is your best bet.
One other factor to consider is the primary motivation for building a new home or renovating your current house. Frequently, homeowners' primary goal is to renovate an old home to drive its value much higher. A higher-value house in a neighborhood of new starter homes can be challenging to sell in the nearby future. New construction generally has a higher resale value due to its modernity and energy performance.
Residential zoning laws and regulations vary from state to state and city to city and largely influence the decision to renovate or build from scratch. Some areas severely limit ground-up construction while others have certain restrictions on how an existing property can be altered. When deciding between the two, it's imperative that you consider local building laws and regulations beforehand.
Turning an existing home to meet your new needs and desires has its benefits and disadvantages. Here are some you should know:
The first upside that comes with the prospect of renovating is that it allows for minor changes. Small-scale upgrades that meet your expectations can be done a little at a time.
Because a renovation can be done a little at a time, it presents fewer financial implications than building from the ground up. Simply put, you save considerably by upgrading only what needs an upgrade and leaving what doesn't as it is.
Certain renovations can be carried out without disturbing the entire structure of the house. This eliminates the need to drastically adjust your lifestyle that often comes with moving.
Taking charge of a renovation yourself works if you have financial constraints. Some DIY options such as repainting walls and doors, cabinetry work, updating old tiles, and new hardware installation, adds to a high-standard look with very little money spent.
Done right, making upgrades to an existing home can increase its value. It's important that you work with an expert to determine the best renovations to increase home value. Creating an addition, kitchen and bathroom remodeling, and amplifying the outdoors are listed as some of the renovations that increase value by Better Homes & Gardens Real Estate experts.
When one is planning a renovation, an old home can come with various other unforeseen repairs and maintenance. Eventually, these home maintenance costs add up to ahefty bill.
If your home needs a major and expensive renovation like a floor-to-ceiling kitchen remodel or replacing plumbing and wiring, it will surely increase your cost.
Undertaking a renovation means your home will be in a mess for days or weeks. On top of that, delays and budget overruns may occur, further increasing the time needed for completion. Worse still, you may be required to move temporarily, which can add to expenses.
Changing your home's footprint, mechanical systems, or any other work that requiresa permit can involve complicated paperwork.
As mentioned earlier, opting to renovate an old house can increase its value when done right. Regarding home improvement cost vs. value, common mistakes like over-improving may result in a renovation that doesn't fully recuperate costs. Additionally, the less-improved and lower-priced houses in the neighborhood can pull down the value of an over-improved home.
It's also important to weigh the benefits of building your own home as well as its setback. Below are a few to consider:
Settling into a new house that's in pristine condition, a new lifestyle, and a new neighborhood can be a refreshing start for you and your family.
Building your custom home from scratch allows you to tailor it to your specifications. That means you can decide on as much space as you desire to cater to immediate and long-term needs.
Easy home financing is yet another upside of building new. In our blog post "New Custom Home Construction Loans—What They Are and How They Work?" we outline the process involved in getting a construction loan and the options available. Luckily for you, an expert agent can handle the entire documentation process, including insurance, taxes, and the ideal loan option.
Building a new custom home means you can personalize both the interior and exterior to suit your personal needs and tastes—everything from the layout and number of rooms down to flooring, cabinetry work, lighting, and doorknobs.
Another obvious benefit of building new is that every single detail is brand-new. You can expect zero to minimal repairs and maintenance. And should anything that's covered by a new home warranty need repair, it will save you dollars.
New custom homes are often built incorporating the newest energy-efficient systems, which helps lower monthly energy bills.
New home building is expensive, and the hidden costs that come with it can quickly drive up the price. The average cost to build a house as of 2022 is a steep $423,300, a report by the Census Bureau and Department of Housing and Urban Development reveals. But while the cost to build a house may be a daunting prospect, the idea saves you more money in the long run.
New custom home construction is time-consuming and can inspire a lot of stress. An article by New Home Source reveals that the average time to build a house is around 8 months for a custom option. With so much to take in, it's best to enlist an expert home builder to make the process as smooth as possible.
Renovation can significantly boost the value of your home, but not all updates yield a high return on investment (ROI) and will simply hurt your finances. Before proceeding with what you might think are renovations that increase home value, it's best to first talk to a home renovation contractor to help you consider all possibilities.
A custom home renovation is an investment of time, effort, and money and should be carried out only if you have set a long-term goal. Suppose you renovate a two-bedroom house but plan on having a lot of kids in the future; you'll likely need to move into a new place your family can grow into. It's reasonable to save the amount for a new home rather than make changes to your existing house.
Consider whether your credit score has improved since initially qualifying for a mortgage. Are current rates at a low? Depending on the state of the market, building a new custom home could mean a more favorable mortgage. The opposite could be true, so it's best to consult real estate experts to determine the best deal.
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